Tax advisers with outstanding personal tax obligations have been given a brief window to act before the Tax Practitioners Board embarks on a major compliance campaign.
The TPB launched a debt and lodgement project on Tuesday, which is set for full rollout in February next year. A key focus will be on tax agents with personal tax debts and no payment plans, and outstanding lodgements including of their income tax and SMSF annual returns.
Tax agents have from now until 31 January to remedy their affairs. This is not an amnesty period, however the TPB will look more favourably on tax agents who have put genuine provisions in place for improvement.
If tax agents are found to be in breach of their professional obligations under the Tax Agent Services Act (TASA), that information will be passed on to other government agencies like the ATO, and professional associations.
In effect, tax agents with breaches could attract penalties and compromise or lose their tax agent registration and professional designation.
The biggest offenders
Of the 78,000 tax practitioners registered with the TPB, about 5,000 have a personal tax debt of over $300, with no active pay arrangements.
About 2,500 practitioners have not lodged one or more of their personal income tax returns or for those of their associated entities. About 1,000 agents have one or more outstanding business activity statement.
There are also 2,700 practitioners who are trustees of their SMSFs and have outstanding SMSF annual returns. Persistent lodgment failure could compromise trustee duties, which trustees agree to abide by on their initial fund declaration form. Late SMSF annual return lodgement has also been a compliance bugbear for the ATO, which regulates the SMSF sector.
Often, fear of mounting debt shapes lodgement patterns – that is, tax agents may be less likely to lodge their returns if it’s likely to result in owing more money.
The personal tax affairs of practitioners has always been on the TPB’s radar, as tax agents are required to act with professionalism and integrity under TASA.
However, government agencies now have unprecedented access to personal and third-party data, and have got a handle on the scope of non-compliance within the tax agent community.
With a full-picture view of a tax agent’s affairs, the TPB assessed it has now become “a matter of urgency” to address levels of non-compliance.
“The data integration has given us a bigger and whole-of-system focus,” chief executive and secretary of the TPB, Michael O’Neill, told ifa sister publication Accountants Daily.
Mr O’Neill, who was appointed to the TPB during its restructure earlier this year, said the data often indicates a correlation between a tax agent’s personal non-compliance and that of their clients.
Further, the timing of the campaign ties in with the ATO’s compliance work in targeting “agents of concern”.
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